Monday, January 30, 2006

Thorpe should bail on bid to invade B.C. shoppers' privacy

VICTORIA - Rick Thorpe's bid to make Costco to hand over the shopping records of thousands of British Columbians should be dead by the end of this week.The B.C. government has been trying to force the retail giant to hand over eight years' worth of information on British Columbians who shopped in the companies' Alberta stories - name, address, what you purchased.The government is worried that too many people who live in communities near the B.C. border are heading into Alberta to shop so they can avoid the seven-per-cent provincial sales tax. That costs B.C. tax revenue, perhaps $12 million a year. But the larger aim is to placate businesses on this side of the border, who complain they're losing more than $200 million in sales a year.Thorpe's revenue ministry has been quietly pushing Costco to hand over the files for three years. The company has just made the dispute public, heading to BC Supreme Court to get an injunction blocking the government's bid.The court ruling likely won't be necessary. Once the government's plan became public it was slammed by everyone from the Canadian Taxpayers' Federation on the right to the NDP on the left. Liberal MLA Blair Lekstrom first defended the plan, then joined the critics.And B.C. Privacy Commissioner David Loukidelis reminded Thorpe that provincial law requires a privacy impact assessment before government launches such surveillance programs. That hasn't been done.Thorpe initially defended the plan. But he received a report from the deputy minister of labour on the issues last week, and was to announce a decision on the plan by Friday. Expect him to back off. The Costco gambit fails on a number of levels.Governments have powers it can use to go after people suspected of illegally avoiding tax.But this is a huge, intrusive fishing expedition. The data being demanded is enormous. It forces Costco into a major effort, and more importantly to violate the trust of its customers. People gave their names and addresses to Costco for its use, not to share with government.And British Columbians' privacy - even people who paid all appropriate taxes - would be violated. The government would get a list of what they bought, and when, going back almost a decade.The problem is real enough, especially for businesses in border towns. The chance to save $200 in provincial sales tax on a big-screen TV makes the drive to Alberta worthwhile. That's bad news for the local electronics store. (British Columbians are supposed to fill out a form and pay the sales tax voluntarily when they return home.)But the solution is arbitrary - no other stores have been targeted - and an unwarranted attack on personal privacy. The border communities have proposed an alternate solution. They want a special lower sales tax for border communities, reducing the benefits of cross-border shopping.The government - after waffling for a year - rightly rejected the proposal, saying the plan would just shift the problem. If border towns had a discount sales tax rate, soon businesses in communities just a little further into B.C. would be complaining that they were losing sales.There are bold options. The government could reverse its 25-per-cent personal income tax cut, which would bring in about $1.8 billion a year. It could then cut the sales tax to four per cent for all British Columbians, returning the same amount of money. The implications, for tax fairness and business competitiveness, would require a lot of study.But don't expect any such major changes. The cross-border shopping problem just isn't that high a priority.Expect more studies, as that's always a safe bet for a government in a tight spot. The province could also usefully fund local campaigns aimed at reminding people of the consequences for the local economy of shopping in Alberta. But don't expect Thorpe to push on with the ill-conceived attack on the privacy rights of thousands of British Columbians.Footnote: The Liberals' own past anti-tax rhetoric is part of the problem. In opposition Gordon Campbell suggested taxes steal money from peoples' pockets, and Geoff Plant likened taxes to extortion and said people were driven to evasion by excessive taxation. Not exactly the way to encourage people to obey the tax laws.

5 comments:

Anonymous
said...

Common sense has never slowed down Thorpe. He was forced to apologize a few months ago for the sleezy practices of some of the debt collectors. But I guess he comes from an area that needs a Cabinet member of two.

I wonder how common it is for the BC provincial government to refund sales tax to out-of-province visitors from Alberta if they shop here? Seems like it would be only fair if BC residents are supposed to pay tax on anything they bring back...

"Revenue Minister Rick Thorpe said he thinks British Columbians would follow the rules and pay sales tax when they return home if they know they what the rules are. So he has decided to reverse course and allocate money within the department's existing budget to mount a public awareness campaign."

"'My view is the demand notice was wide reaching in its request and although acceptable by law, in my opinion it was outside the scope of government's intention to seek targeted information related to specific tax administration matters,' said Thorpe."